In August 2012, when there were dark clouds of uncertainty hovering in the horizon and bank stocks were totally out of favour owing to the high interest regime, Rajen Shah of Angel Broking looked investors straight in the eye and asked them to buy South Indian Bank. There will be a 25% gain, he said, in his soft but clear voice.
Now, as any investor will tell you, it is very rare for any analyst to stick his neck out and make a confident prediction. Most try to hedge their recommendation with caveats to avoid embarrassment if things go wrong.
Now, on the back of strong Q3 FY 2013 earnings, South Indian Bank has surged to a 52 week high of Rs. 30.65, investors who heeded Rajen Shah’s advice have pocketed a hefty 28% return in just 5 months.
Of course, credit for identifying South Indian Bank as a potential multibagger stock must go to Raamdeo Agarwal who gave out a buy call when the stock was just Rs. 18 (adjusted for splits).
If you are despairing at missing out on the opportunity, it may not be too late even now. The consistent way in which South Indian Bank is powering its way forward, today’s price (Rs. 28) will look cheap in 5 years time. In fact, Angel Broking has increased the price target in the medium term to Rs. 34. Even Motilal Oswal has recommended a buy on the stock with the same price target of Rs. 34. This means that a 21% gain is still on the table.
So, if you have low exposure to bank stocks, take a long and hard look at South Indian Bank, you won’t regret it.
South Indian Bank Angel Research Report